Christian Mayes, PORTFOLIO ADVISER, 19 SEPTEMBER 2023:
Jefferies analysts Matthew Hose and Fiona Huang have assessed various outcomes ahead of the Hipgnosis Songs Fund continuation bid.
As of this morning (19 September), shares in the music royalty investment trust are down 12% since last Thursday’s announcement of the sale of a fifth of its portfolio to the Hipgnosis Songs Capital private fund.
The Jefferies analysts said the share price drop suggests the market is “seemingly unhappy” with the terms of the deal…
If approved, the $465m deal announced last Thursday would see a fifth of its portfolio shift to the Blackstone-owned private vehicle. At the same time, the trust is also subject to a continuation vote due by the end of the year.
Alongside the asset sale, Hipgnosis Songs’ board announced a range of proposals which it believes will act as a catalyst for a share price re-rating ahead of the continuation vote, including a share buyback programme of up to $180m…
Bid to win over shareholders
The announcement of the portfolio sale and buyback programme has been seen as a bid to win over shareholders ahead of the looming continuation vote, expected by the end of December.
Reacting to the measures, QuotedData analysts said: “The board had promised action prior to this announcement ahead of their upcoming continuation vote and the details provided are certainly a positive step. Shareholders and analysts had been calling for Hipgnosis to sell some of its catalogue and use the money to fund buybacks to narrow the discount and possibly to pay down some debt and these measures have all been announced.
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